Challenge and consider changing your licensee
- published on 17/05/2012
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The professional obligations of financial planners trump those of their employers and should guide their behaviour in dealing with practices or processes that ... [more]
‘Naïve advisers’ must embrace private labels
- 7 February, 2012
- 3 comments
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“The critical issue is about advisers not giving up the control and ownership of their clients," says Peter Johnston.
Financial planners are no longer prepared to use administration services where they give away ownership of their clients and are demanding a greater equity stake in financial platforms.
Association of Independently Owned Financial Planners (AIOFP) executive director Peter Johnston believes the industry has learned the hard way that white labeling financial products and platforms from institutions is counter productive.
Citing the continuing impact of ANZ’s buyout of Oasis Asset Management on adviser and dealer group members, Johnston says that AIOFP expects its members will be far more demanding, vocal and insist on greater involvement and equity in financial products and platforms in the future.
“The major issue of ANZ’s Oasis purchase for AIOFP’s advisers relates to client ownership and equity,” he says.
“Especially as a number of high profile national dealer groups, who built the business with their white label Oasis products, received nothing from the sale to acknowledge both their contribution and efforts.”
While Johnston acknowledges that ANZ bought the business without any adviser commitments, he believes advisers have been “naïve” over the years.
The answer, he claims, is private labeled platforms where there is an independent trustee and the advisers appoint the administrator as opposed to a white-labeled product where a bank or institution is the trustee responsible entity (RE).
“The critical issue is about advisers not giving up the control and ownership of their clients and participating in any equity if the platform is sold,” he says.
“This is one of the major reasons why SMSF’s have become very popular, advisers are no longer prepared to use administration servicers where they give away ownership of their clients.”
AIOFP predicts that this will be the basis for a major paradigm shift within financial services whereby advisers in growing numbers will demand greater control and management over their clients.
Asked to comment, a spokesperson for ANZ Wealth said Oasis has never had contractual arrangements with its white label clients regarding equity in the Oasis business.
“The terms and conditions of Oasis’ arrangement with advisers does not allow ANZ (or OnePath) to alter the adviser client relationship – except where required due to regulatory obligations,” said a statement.
“The best interest test is not impacted by the investment platform arrangements of advisers (whether white label or private label).”
Finally advisers are waking up to the inherent risks associated with sharing client information with third parties. The acronym ‘DIY’ should be applied to the advisers’ businesses as well as to the SMSF concept! Offering SMSF admin keeps the client relationship tight at a reasonable cost to client.
The comment that advisers or accountants are recommending SMSF’s because advisers retain control and ownership over clients’ Super admin is not corect. The reason why SMSF’s are recommended in individual cases is because it is part of a strategy that is not available within Public Offer admin platforms
The next issue we need to consider whether admin platforms are really a necessary expense clients and advisers need to have.
I agree with Jacks comment on why SMSF’s are used and also agree that SMSF’s offer clients more flexibility and control over the underlying assets and estate planning. However I don’t think advisers want to be super fund administrators.